Dunkin’ Donuts owner admits fraud

The owner of several Honolulu franchises has admitted to filing a false tax return and possessing a fake Republic of Costa Rica passport that he bought for $9,000.

Kenneth Chio Heng Iong, who opened his first Dunkin' Donuts in Pearl City, pleaded guilty Friday before U.S. Magistrate Judge Kevin Chang to tax evasion and using a false ID document.

According to a plea agreement, Iong signed a false 2000 federal tax return understating the income tax he owed.

During calendar year 1999, Iong diverted large sums of money to himself from ICH Group Inc., doing business as Sushi Chef, and obtained bank financing by submitting bogus invoices to banks to fund loans for equipment that ICH had not purchased, the plea agreement said. He also underreported rental income.

Iong admits that the total tax he failed to report for the years charged in the indictment was more than $35,000, although the government maintains the amount is closer to $240,000.

Iong said he knew the passport he bought was bogus because although it bore his photo, it was issued in the name of Win Ping King Fong. He obtained the passport so that he could enter and leave the United States undetected.

Prosecutors said earlier that Iong flew to China and used it to gain entry. It was not until he flew to Japan did officials there discover it was fake.

Iong faces up to five years in federal prison for the tax evasion and up to three years for possessing the fake passport.